Why Blockchain is More Alive Than Ever
It’s been almost ten months since the fateful day that 1 BTC eclipsed $20k. It’s been a long, arduous, heart-wrenching road for traders and holders alike, especially if your foray into the world of blockchain started in 2017. Nevertheless, there are now more reasons than ever to be excited for the future of blockchain and cryptocurrencies, and we partly have this price crash to thank.
Most of us were caught off guard by the price increase that followed the failed ETF in March 2017 and the subsequent parabolic rise over the next nine months, barring short term setbacks (block size debate, mempool clogging, etc). Most exchanges were as well, and as the popularity of cryptocurrencies soared, many couldn’t keep up with the demand. Some large exchanges, such as Bittrex and Bitfinex, completely halted new user registration because their infrastructure could not handle the massive influx of volume, and others were plagued with technical issues. Many of these issues were not resolved until the massive hype began to die down following the price decline, and gave exchanges some breathing room to update their infrastructure. These exchanges lost out on an enormous amount of revenue due to the fact that their income model is based on taking a small fee on each trade, and closing off access to new users severely limited their profit potential. Next time, you can be sure they’ll be ready.
Just as exchanges used downtime to update, blockchain protocols, applications, and companies have done the same. The first implementation of a Lightning Network was released in early 2018, which allowed for instant, extremely low-fee transactions on top of the Bitcoin protocol. With a topography almost identical to that of the Internet, payments are routed using bidirectional channels, similar to how internet packets are routed. The LN currently touts roughly 2700 active public nodes, 10k open channels, and a capacity of 112 BTC, and is growing every day. Simultaneously, many large corporations have been fleshing out their blockchain services and integration, including Microsoft, IBM, Oracle, and SAP. Just yesterday IBM commercially released the Food Trust tracking network, which allows the tracking of food from farm to shelf, and many companies have already begun use.
2017 was characterized by the rise of a new type of fundraising: the Initial Coin Offering, enabling over 400 blockchain startups from all corners of the globe to raise $5.6 billion. However, very few projects of any significance materialized. This was very troubling for many people, and even Vitalik Buterin, the founder of Ethereum, has stated that 90% of ICOs will fail, and a few countries even outright banned them. The fallout is apparent in 2018, as there has been a shift away from ICOs and instead toward STOs, or Security Token Offerings. Because security tokens represent actual securities, they have value backed by a tangible asset, something that traditional tokens lack. STOs offer a much lower chance of fraud and are seen as more legitimate than ICOs, which can be very attractive to large investors who see the potential of blockchain technology.
In the future, the last ten months won’t be remembered for it’s historic losses. Rather, we will look back and see the vast benefits brought to the overall health and legitimacy of the blockchain ecosystem. Bubbles allow companies and projects to exist that otherwise wouldn’t, and like the dot com bubble, they will be flushed out, only leaving the the best representatives of what blockchain and cryptocurrencies have to offer. It would be insane to consider the Internet a failed technology because of the crash in 2000, and the same applies in 2018. Blockchain isn’t dead; it’s just getting started.
Note: this article does not constitute financial advice. Gator Blockchain strongly recommends everyone to do their own research.
